Certified Internal Auditor (CIA) Part 1: Business Acumen — Question 46

Which of the following would have the least impact (either positive or negative) on an assessment of a department's control environment?

Answer options

• A. The department managed long-term investments, including investment in derivatives and other financial instruments, to maximize return.
• B. The department manager sets a tone of honesty and integrity in all business dealings and this tone is emulated by department personnel.
• C. Many department functions were duplicated or verified by other department employees as part of the department's normal procedures.
• D. Audit tests designed to verify compliance with control procedures detected a general failure to follow standard procedures for transaction authorization.

Correct answer: A

Explanation

Option A is correct because managing long-term investments, while important, does not directly relate to the internal control environment's effectiveness. Options B, C, and D all involve aspects of integrity, verification, and compliance, which significantly impact the evaluation of the control environment.